Sunday, July 10, 2005

With the two negotiating parties hunkering down for weekend talks, I'd figured I'd weigh in on some of the basic points that are expected to be included in the new CBA. It's been a while since I've commented on the CBA here, which has helped me maintain what is left of my sanity.

**A hard salary cap of $37 million linked to 54 percent of league revenue. The minimum payroll will be about $24 million with a provision that will limit the salary of any player to 20 percent of the team cap figure.

(So, under this new deal, the top salary for any one player would be $7.4million . This still seems pretty good as most NHL player didn't deserve this salary under the old system. If you are the top dog on any one team, you won't be suffering all that badly.I do wonder if this $37mil figure includes benefits and other non-salary expenses.

Under Bettman's "Final Offer" from February 15th, the NHL proposed a maximum cap of $44.7Million. Of course, that offer had a lot of poison pills hidden in the salad leaves.)

** A 24 percent rollback of existing contracts and qualifying offers.

(Once the NHLPA threw out that bone, the NHL wouldn't let it go from their clenches. In order to get teams under the cap, this really was a necessary evil)

** An NBA-style escrow provision under which 15 percent of each player's paycheck will go into an escrow account until revenue is calculated after each season. If league-wide spending on salaries exceeds 54 percent of revenue, the difference between the salaries paid and the negotiated percentage will be paid to teams from the escrow account.

(How would you love to have 15% of your salary held by your employer 'just in case' the company doesn't do that well this year? Well, it helps that most NHL players make nice salaries and 15% won't kill them. Still, I am surprised the players would give in to having a possible further reduction to their salaries.)

** Players will be able to represent their homelands at the Turin Olympics next February. The All-Star Game will be dropped so there won't be two interruptions of the season.

(Yes! Finally a good idea from both sides. The Olympics are far more prestigious and important than the All-Star Game. I really wish they would cancel the All-Star Game every year since it's nothing more than a boring corporate schmooze-fest. On the other hand, the NHL needs any marketing tool and exposure it can get, cancelingling the All-Star Game permanently is not going to *help* the league, really.)

** Each team will have an equal chance in the lottery for the No. 1 pick in this year's entry draft, with forward Sidney Crosby the obvious top prize.

(I don't think bad teams like the Penguins, Hurricanes, and the New York Rangers should benefit by having two straight drafts with good drafting position and get rewarded for poor management. On the other hand, why should a team like the Red Wings have a shot at Sidney Crosby? The Entry Draft was there to help the poor teams get better...this would defeat the purpose entirely.Hmm, I smell a rat... the 'Fix' is in. Will Bettman fix the balls to get Crosby to NYR, Montreal, or Toronto? The odds of Vancouver getting Crosby may officially be 1-in-30, but they are truly 'not a chance in hell')

** No luxury tax, but revenue sharing through a complex formula under which the top 10 revenue-earning teams will give a percentage of their revenue to small-market teams.

(Many pundits, especially Spector, agree that the league would be better off with revenue sharing and not a luxury-tax. Under a luxury tax system, the rich teams could still outspend the poor teams and we'd still have some level of economic disparity between clubs. Under a revenue-sharing system, the poor clubs have one less excuse to cry 'poor'. This hasn't stopped low-revenue MLB teams from pocketing the $$$, making the Salary Floor a necessary step to ensure the money is eventually falling into the pockets of the players as an investment.

Now, my question is... what will stop NHL teams from cheating each other?

If I own a hockey team that is close to the bottom 10 in revenues, what would stop me from hiding revenue streams in order to get to the bottom 10 and receive some corporate charity? What would stop a team in the Top 10 from hiding revenues so that they didn't have to share their jellybeans?)

** Salary arbitration will be conducted "baseball style," with each side presenting a figure and the arbitrator obligated to pick one figure or the other. Provisions will allow teams to walk away from a specified number of awards.

(This will certainly help the owners the most, but it can also help the players. No longer can either side make a really lowball or highball offer and simply expect the arbitrator to come 'half-way'. This system should help prevenridiculousiculous contracts and ensure both sides will come to the table with a more realistic vision of contract value. )

** Minimum age to qualify for unrestricted free agency will be 31 in the first year of the deal, 30 the following year and 28 for the remaining four years.

(I can understand why they are gradually lowering the age. There will be more than enough chaos once the new CBA is implemented. If they lowered the UFA age right away, most GM's heads would probably explode! Having quite a few UFA players on the market in their prime will really make offseasons exciting and/or nervewracking for the fans. Imagine if you develop a star player and he jets for your rival as he's hitting his peak? Imagine signing that same player away from your rival? A flooded market will depress prices, especially for the very old players who have been receiving great Golden Parachute contracts for years.

For the players, this also ensures a great deal more freedom that they never had before. Although they may not get the 'last big bang' that they did under the old system, they won't be a slave to their NHL team until they are 31 and probably past their prime. One thing the fans don't appreciate is how little choice a player has in their chemploymentloyement. For 13 years, the NHL player is basically 'owned' by one team and can't really play for a city that they want to. How would you like to have your services owned for such a long period, with your only other option being Europe?)

** Players' performance bonuses will be restricted according to a standardized formula.

(We need to see this in great detail. I've heard that this formula would include +/-, which is an incredibly flawed statistic. Such a formula would easily benefit those on successful teams while some good players on poor teams could suffer simply because of their environment.)

** Earnings will be limited for entry-level players, who will be subject to salary limits for their first four seasons instead of three. Their maximum earnings will be $850,000.

(We can see the reasoning behind not giving mega bucks to unproven prospects, but we know that this provision could hurt the NHL as well. NHL teams could lose out on some top prospects since European teams could always offer more.

Still, I believe the NHL clubs are also banking on the fact that "We're the NHL!" and the prospects could want to play for the NHL and would be willing to suffer for 4 years with a bit less money. You know North American-raised players aren't going to flock to Europe, and many European prospects still dream of playing in the most prestigious league in the world. I don't think this will hurt the NHL clubs as much as some pundits do, but it does make drafting a top-flight European player more risky.)

** The largest unresolved issue is the disposition of contracts for the 2004-05 season.

(...and this could be a dealbreaker...probably the reason why we don't have a CBA deal signed right now. With the NHLPA already given up so much, and the fact that the NHL forced Yashin to play out his contract after sitting out a year, you can bet they think that the NHL should honour all of their contracts much like the players were expected to do so.)

One last point I'd like to re-address is the issue of auditing and determining revenues. Not only will the NHL teams have to report to the NHLPA, but also to each other. This system will really start to break down and cause problems if teams are cheating the players and each other.

Gary Bettman has talked tough in the past (and we know how little that is worth) about punishing teams that underreport revenue. For once, the little Napoleon needs to get tough and the two parties need a way to make sure all NHL teams are reporting their fair share of revenue.

I agree on the young players, I don't think the maximum $850k is going to hurt the NHL. The top dozen picks in any draft used to expect more than that, but that's it. The Canadian/US guys won't go to Europe for more, which means that only the European young players may stay. That's a huge risk on their part, if they play pro in Europe and underachieve their stock will fall or worse yet, what if they get injured. If they play well then it will be perceived to be against inferior competition and they'll still have to adjust to the NHL when they do come over. I think in practical terms if you have the number 5 pick overall and you have two players in mind (one North American, one European), you'll prefer the North American player now.

In terms of the existing contracts, I've read in a few places that the NHLPA gave up on the demand to honour contracts a while back and the only issue remaining is the legal approvals on the paperwork.